What Does Close Of Escrow Mean?
Closing on a house, often called the ‘close of escrow,’ is the final step you will take when buying a house. It’s the moment when the property’s title is transferred from the seller to the buyer, the money is transferred from the buyer to the seller, and all aspects of your real estate transaction are settled. The buyer gets their keys, and the seller gets their cash!
Is Close Of Escrow The Same Thing As The Closing Date?
Technically, no. The close of escrow happens when all terms and requirements of the contract are fulfilled by both parties. The closing date is the date that title is recorded in the name of the new owner by the county clerk.
Colloquially, however, these terms are used interchangeably in the real estate and lending industry.
Close Of Escrow vs. Closing Date
As mentioned above, the term “close of escrow” represents the fulfillment of all requirements by each party to the transaction. On the buyer’s side, these requirements generally include lifting any contingencies (such as loan, appraisal, and inspection) and delivering their funds to escrow. On the seller’s side this may include making necessary repairs or providing buyers with additional information regarding the home’s condition.
On the other hand, the “closing date” is a specific term referring to the exact day when the title is recorded in the buyer’s name by the county clerk, legally making the buyers the new owner.
Why is understanding the distinction important? You may have outstanding obligations to perform before escrow can close – with mortgage financing being one of the most important item for buyers to resolve on time. Fortunately, JVM’s expert team and fast close abilities can keep you on track for closing on time. And, many times, buyers who need to close on their loan ASAP come to JVM so that we can save their deal, even if they have already started the process with another lender.
On the other hand, knowing the exact closing date recognized by the county is important for legal reasons. Generally, this date may have implications for tax schedules and deadlines.
What is the Closing Timeline for a House?
Many homebuyers ask their lender, “How long does it take to close on a house?” The average closing time on a house is 30 days. But JVM Lending can close in less than half of that time; a 14-day close timeline with JVM Lending is a regularity on conforming and FHA Loans.
Other specialty loan programs can take a bit longer – check with our team to chat about your specific scenario.
What To Expect When Closing On A House?
Expect paperwork. A lot of it. When it’s time to close on a home, you’ll meet with a notary public, typically at the escrow office or at your home. You’ll need a valid, unexpired government-issued photo ID, such as a driver’s license or passport.
The notary will go over the documents with you as they guide you through the full package.
If you are in a “dry funding” state, such as California, Oregon, Arizona, or Idaho, after your documents are signed, they will be sent back to the lender for review and you will likely have a day to wait until your loan funds and escrow closes.
If you are in a “wet funding” or “table funding” state, which includes Texas, Florida, Georgia, Tennessee, and Massachusetts, your loan will be funded immediately after the documents are signed. In these wet funding states, it is common for you to close escrow immediately afterward and receive your keys at the signing table.
What Happens The Week Before Closing On A House?
Ah, the final stretch! Many buyers wonder what takes so long for them to officially close after they’ve finally finished providing all their documents to the lender.
Here’s a more in-depth look at what happens:
- Full Loan Approval/Clear to Close: Your loan was already “conditionally” approved a few days into the process. Now, all lender “prior to document” conditions have been satisfied, so your loan can be released into the closing stages. You might feel like you’ve already submitted a mountain of paperwork throughout the homebuying process and wonder why you needed more – typically this is due to federal guidelines that require a lender to review the most recent version of every document (like your paystubs and bank statements), as regulations requiring that lenders source any and all movement of funds between your bank accounts.
- Final Soft Credit Check: Before releasing your loan, underwriters perform an additional soft credit check to ensure that no new debts have been obtained during the escrow process. This soft check does not harm or change your credit scores.
- Loan Documents to Escrow: A document drawer at the bank will gather and prepare all loan documents that need to be signed for closing. This process is not just hitting “print” on the documents—all names, terms, addresses, and information are thoroughly checked to ensure accuracy. Once confirmed, the loan documents are securely sent to the escrow office so they may prepare the signing appointment.
- Escrow Verification: The escrow agent will double-check the information on their end. They will also ensure that all necessary funds, including your earnest money deposit, down payment funds, closing costs, and loan funds (if in a wet funding state) are in place and ready for the closing and signing appointment.
- The Final Walkthrough: While the bank and escrow work on prepping everything for closing, you will do a final walkthrough with your realtor. This is your chance to inspect the property one last time before ownership transfers and make sure nothing has changed. Closely check any agreed-upon repairs were completed and that the house’s condition remains the same or better than when initially viewed.
- Review the Closing Disclosure: You should receive a Closing Disclosure (CD) at least three days (or earlier) before the closing date. This legally required document is an updated and more accurate version of the Loan Estimate received at the beginning of the transaction. The CD breaks down your loan’s terms, the remaining cash to close needed from you, and all closing costs and credits. If there are any inconsistencies or errors, contact your lender ASAP.
- Signing Appointment: Escrow will contact you to schedule a signing appointment with a notary public. Make sure you are ready for this by bringing a valid government-issued ID, such as a driver’s license or passport. Also, be ready to wire in your funds or provide a cashier’s check for the remaining cash to close. Personal checks are not accepted.
- Loan Funds and Title Records: After both buyer and seller have their signed documents reviewed by escrow and the lender, the loan funds are released and escrow closes. Then, as soon as feasible afterward, the county clerk records the new title, officially making you the new owner.
And, after all that, congratulations! You are officially the owner!
Questions About The Closing Process?
The mortgage process can often feel like stepping into uncharted territory. With a myriad of terms, dates, and procedures, easy to get lost. But remember: you aren’t alone on this journey. Here at JVM Lending, we are expert guides for homebuyers navigating the complex world of real estate financing.
Whether you’re wrestling with the nuances of closing, wondering about getting pre-approved, or hunting for a loan type tailored to your specific homebuying aspirations, our team is here for you!
Take control, harness our expertise, and let us illuminate the path for you. Reach out to JVM Lending’s specialists today and turn your homebuying dreams into reality!
